Elevated levels of cellular cholesterol have been identified as one factor contributing to the onset of Alzheimer's disease (AD). Specific interaction between cholesterol and the amyloid precursor protein (APP), investigated via NMR experiments and computational studies, has been proposed to play a critical role in the processing of APP by secretases and the biogenesis of amyloid-β (Aβ) protein. We present all-atom molecular dynamics simulations of the 40-residue congener of the C-terminal domain of APP, C9916-55 (C99), in cholesterol-enriched DMPC lipid bilayers. We investigated the effect of cholesterol concentration on the conformational ensemble of wild-type C99 and C99-cholesterol associations at the low pH of endosomal environments, at which residues E22 and D23 are neutral. C99 was also characterized in liquid ordered domains for Dutch (E22Q) and Iowa (D23N) Familial AD mutants at low pH and for the wild-type sequence using protonation states characteristic of neutral pH. Our results reproduce the equilibrium constant of past NMR characterizations of the C99-cholesterol interaction but are not consistent with the C99-cholesterol binding hypothesis. We find that the lifetimes of both DMPC and cholesterol complexed with C99 display a power-law distribution of residence lifetimes. Longer-lived C99-DMPC and C99-cholesterol complexes are primarily stabilized by salt bridges and hydrogen bonds of lysine amines to phosphate and hydroxyl groups. Nevertheless, specific interfaces for C99-cholesterol association which are not present for DMPC can be identified. Changes to C99-cholesterol interfaces are found to depend on C99 tilt angle and orientation of the juxtamembrane domain of C99 containing residues E22 and D23. These observations support a more nuanced view of the C99-cholesterol interaction than has previously been suggested. We propose that cholesterol modulates the conformation and activity of C99 and other small transmembrane proteins indirectly through induction of the liquid ordered phase and directly through hydrogen bonding. This suggests a critical role for membrane heterogeneity introduced by cholesterol in modulating the structural ensemble of C99 and the production of Aβ.